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noulg) did 'Target use to account for inventory? ATC 5-2 Group Assignment Inventory cost flow The accounting records of Blue Bird Co. showed the following balances at January 1, Year 2: Cash Beginning inventory (100 units@ $50, 70 units @$55) Common stock Retained earnings $30,000 8,850 20,000 18,850 Transactions for Year 2 were as follows: Purchased 100 units@ $54 per unit. Sold 220 units@$80 per unit. Purchased 250 units@ $58 per unit. Sold 200 units $90 per unit. Paid operating expenses of $3,200. Paid income tax expense. The income tax rate is 30%. Fundamental Financial Accounting Concepts, Tenth Edition (with bonus Ch Required a. Organize the class into three sections, and divide each section into groups of three to Accounting five students. ssign each section one of the cost flow methods, FIFO, LIFO, or weighted average. The com- pany uses the perpetual inventory system. Group Tasks Determine the amount of ending inventory, cost of goods sold, gross margin, and net income after income tax for the cost fl that cost flow assumption. low method assigned to your section. Also prepare an income statement using Class Discussion e a representative of each section put its income statement on the board. Discuss the effect that each cost flow method has on assets (ending inventory), net income, and cash flo method is preferred for tax reporting? For financial reporting? What restrictions are placed on the use of LIFO for tax reporting? b. Hav lnventory management issues at the Penske noulg) did 'Target use to account for inventory? ATC 5-2 Group Assignment Inventory cost flow The accounting records of Blue Bird Co. showed the following balances at January 1, Year 2: Cash Beginning inventory (100 units@ $50, 70 units @$55) Common stock Retained earnings $30,000 8,850 20,000 18,850 Transactions for Year 2 were as follows: Purchased 100 units@ $54 per unit. Sold 220 units@$80 per unit. Purchased 250 units@ $58 per unit. Sold 200 units $90 per unit. Paid operating expenses of $3,200. Paid income tax expense. The income tax rate is 30%. Fundamental Financial Accounting Concepts, Tenth Edition (with bonus Ch Required a. Organize the class into three sections, and divide each section into groups of three to Accounting five students. ssign each section one of the cost flow methods, FIFO, LIFO, or weighted average. The com- pany uses the perpetual inventory system. Group Tasks Determine the amount of ending inventory, cost of goods sold, gross margin, and net income after income tax for the cost fl that cost flow assumption. low method assigned to your section. Also prepare an income statement using Class Discussion e a representative of each section put its income statement on the board. Discuss the effect that each cost flow method has on assets (ending inventory), net income, and cash flo method is preferred for tax reporting? For financial reporting? What restrictions are placed on the use of LIFO for tax reporting? b. Hav lnventory management issues at the Penske

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